China Tacks Forward

September 19, 1997

"Deng is gone. Long live Deng." No such slogan was unfurled at China's Communist Party Congress this week. But those words would suit as a terse summary of China's future direction under the navigation of President Jiang Zemin: more of the same.

Deng Xiaoping was a "great helmsman" because he knew how to tack. He pushed China inexorably toward competitive capitalist reform by moving along that course, then tacking back toward old-guard orthodoxy when necessary.

Jiang this week cemented his role as leader of that vast, hard-to-manage enterprise called China by announcing he would press forward with Deng's policies by privatizing more state industries. He acknowledged publicly that that would mean job losses as inefficient state firms became leaner private ones, or simply closed their doors. He also announced that the People's Liberation Army would cut 500,000 soldiers by the end of the century. Downsizing is to help pay for new weapons.

Anyone who has watched one of these every-fifth-year Communist congresses knows that they resemble conclaves of some old theology - with semantics to match. Party-authorized moves into capitalism are termed moves into the "primary stage of socialism." Privatizing is officially called a move to "public ownership" because shares become available to the public.

To date only some 700 of 118,000 state-owned enterprises have been privatized. So there's a long way to go. The rapid growth of private-sector competitors would appear to call for a faster-paced sell-off of the mostly loss-prone state firms. (Most of China's expected 10 percent growth rate next year will be in private industry.)

But the actual pace of selling or closing state firms likely will fluctuate with the number of jobless, the amount of unrest it may cause, the absorption of discharged soldiers, and the ruses of local leaders propping up local state firms.

Jiang told the party faithful that this phase of socialism would take 100 years. That's plenty of leeway. But at least he's tacking on the right course as he prepares to visit that capitalist mecca, Washington, next month.